StrictlyVC: June 4, 2015

Hi, everyone! Hope your Thursday is off to a good start.


Top News in the A.M.

Dish Network is reportedly in talks to merge with T-Mobile US — a deal that would accelerate a wave of consolidation across the U.S. media and communications industries, reports the WSJ.

On Monday, Apple will begin its annual developer conference, where the company is set to release new tools for software developers to create smarter apps for its Apple Watch. The New York Times has more here.


Madrona Venture Group Seals Up Its Sixth Fund in Seattle

Madrona Venture Group, the 20-year-old, Seattle-based early-stage venture capital firm whose bets include Redfin, Apptio, iSpot.TV and others, has closed its sixth fund with $300 million. Yesterday, we chatted briefly with longtime managing partner Matt McIlwain about the fund and the investing scene in the Pacific Northwest more generally.

Your new fund is the same size as its predecessor, closed in 2012. 

Same size fund, same strategy. It’s all systems go.

Is the team the same?

One of our managing directors, Greg Gottesman, is transitioning to a venture partner role. [Gottesman, who joined Madrona in 1997 and was previously CEO of the dog-owner community] will still be involved but he’s been kicking around some new entrepreneurial ideas that he wants to pursue and he’ll be talking about them later in the summer. We also added three strategic advisors [Isilon co-founder Sujal Patel; retiring F5 CEO John McAdam; and Concur CEO Steve Singh].

You’re obviously a big proponent of the Pacific Northwest investing scene. 

I hate to use the word, but it’s really become a juggernaut of innovation in cloud, in big data, augmented reality, next-generation consumer… Related to that, the rise of Amazon and revitalization of Microsoft is attracting all kinds of talent to this region, which bodes well for us.

How are you measuring the impact of [Microsoft’s newest CEO] Satya Nadella? 

I was over at Microsoft last week getting a tour of its HoloLens [holographic goggles technology] and I was blown away by the demos. Operationally, there’s a huge difference, too. One of our startups, Smartsheet [which makes cloud and mobile-first productivity tools], had tried unsuccessfully a few years ago to integrate with Microsoft. [Under Nadella], the company has gotten traction with Office 365 and was just featured at a recent conference as an example of a great integration partner. The pace at which Microsoft folks are understanding and building integration with the startup community is significantly enhanced over the last 18 months. Satya has just set a different tone — more humble and more outward looking about what the ecosystem and customers want.

Madrona was super active last year, investing $463 million into the Pacific Northwest with its syndicate partners. Are valuations still comparatively more reasonable up there?

[Laughs.] Yes, they’re somewhat more reasonable, and the cost of living is somewhat more reasonable. We roll our eyes when square footage hits the high $30s; you [in the Bay Area] start rolling your eyes when it hits the high $70s. It also doesn’t hurt that we don’t have a state income tax.

[As important] we have a growing [well of] deep talent here. Some people have come to work at Microsoft and Amazon but Facebook and EMC and Google also now have hundreds if not thousands of employees here. We’ve funded 15 companies that have come out of the University of Washington. Our LPs are also very excited about this multi-generational effect we’re starting to see. For example, we backed Isilon [the enterprise storage company that was acquired by EMC in 2010 for $2.25 billion]; now we’ve backed two teams to come out of the company, the next-gen storage companies Igneous and Cumulus. There’s just talent all over the place.


New Fundings

1World Online, a 3.5-year-old, San Jose, Ca.-based company that sells web and mobile-based engagement applications, content, and analytics for publishers, political candidates, and brands, has raised $2.5 million in funding from DEFTA Partners, Altair Capital, GV Launch Gurus, and Nest HK. The company has now raised $4 million to date, shows Crunchbase. More here.

Auspherix, a 1.5-year-old, Sydney, Australia-based early-stage anti-infectives company that’s developing antibacterials, has raised £6 million ($9.2 million) in Series A funding led by new investor Imperial Innovations, with participation from earlier backer Medical Research Commercialisation Fund. More here.

Believe Digital, a 10.5-year-old Paris, France-based digital distributor and label services provider for artists and labels worldwide, has raised $60 million in funding from Technology Crossover Ventures, XAnge, GP Bullhound, and Ventech. More here.

Blend Systems, a two-year-old, San Francisco-based social app whose users create a trend (a movement, inside joke, or challenge), then nominate their friends and others to join them, has raised $6.3 million in Series A funding led by New Enterprise Associates, with participation from Metamorphic Ventures, Red Sea Ventures, Great Oaks Capital, and the Al Nowais family from Dubai’s Waha Capital. Earlier investors, including CAA VenturesFoundation Capital, Galvanize Ventures, BaseVC, and others also joined the round. The company has now raised $10 million altogether. More here.

Bolt Threads, a year-old, Emeryville, Ca.-based company that’s creating engineered silk fibers based on proteins found in nature, has come out of stealth mode with $32.3 million in Series B funding led by Foundation Capital, with participation from Formation 8 and Founders Fund. The company has raised a total of $40 million to date. Forbes has much more here.

Calhoun Vision, an 18-year-old, Pasadena, Ca.-based vision correction company whose technology centers on a light-based procedure, has raised $69 million in its first outside funding from Longitude Capital, Balance Point Capital Partners, H.I.G. BioVentures and RA Capital Management. More here.

Cockroach Labs, a five-month-old, New York-based company focused on creating an open source database designed to scale and survive disasters, has raised $6.25 million in Series A funding led by Benchmark. More here.

Electronic Commerce, a 19-year-old, Elkhart, In.-based HR platform company, today announced it has secured a $40 million majority growth investment from Frontier Capital. More here.

FourKites, a three-year-old, Chicago, Il.-based logistics platform that tracks delivery trucks, has raised $1.25 million in seed funding led by Hyde Park Venture Partners, with participation from Hyde Park Angels, Harvard Business School Angels, Bluestein & Associates and Otter Consulting. The Chicago Tribune has more here.

LaunchDarkly, a year-old, San Francisco-based feature-flags-as-a-service product (note: feature flags allow software teams to turn features on and off for users at different times), has raised $2.6 million in seed funding led by SoftTech VC, with BloombergBeta, 500 Startups, Cervin Ventures and numerous angel investors participating. More here.

Layer3 TV, a two-year-old, Boston-based “next-gen cable company,” has raised $51 million in fresh funding from earlier investors Evolution Media Partners and North Bridge Venture Partners, along with new, unnamed investors. The company has now raised more than $80 million altogether. More here.

MineSense, a seven-year-old, Vancouver, British Columbia-based developer of sensor-based ore sorting systems, has raised an undisclosed “multi-million dollar” amount of Series B financing. The round was led by Prelude Ventures, with participation from Export Development Canada, Cycle Capital Management, and earlier backer Chrysalix Energy Venture Capital. The company had previously raised $8.9 million, shows Crunchbase.

PicsArt, a four-year-old, San Francisco-based photo editing app on Android and iOS, has raised $15 million in new funding from Insight Venture Partners and Sequoia Capital. The round follows a $10 million investment from Sequoia earlier this year.

Plotly, a two-year-old, Montreal, Canada-based collaborative data science company, has raised $5.5 million in funding from MHS Capital, Siemens Venture Capital, Rho Ventures, Real Ventures and Silicon Valley Bank. Vator has more here.

Qnergy, a five-year-old, En-Harod Ihud, Israel-based energy technology company, has raised $20 million in Series A funding led by Tene Investment Funds. More here.

Sphero, a five-year-old, Boulder, Co.-based company that develops “connected” play toys, has raised $45 million in new funding led by Mercato Partners, with participation from a subsidiary of The Walt Disney Company and other strategic investors. The company has now raised at least $80 million altogether, including from earlier investors Techstars, Grishin RoboticsHighway 12 Ventures, Shea Ventures, SK Ventures and individual investors. TechCrunch has more here.

TabbedOut, a five-year-old, Austin, Tex.-based mobile payment startup, has raised $21.5 million from investors in what it tells Venture Capital Dispatch will be its final funding round before going public. The company has now raised $39 million altogether, shows Crunchbase; its backers include Heartland Payment Systems, Morgan Creek Capital Management, and New Enterprise Associates.

Welocalize, an 18-year-old, Frederick, Md.-based supply chain management software company, has raised an undisclosed amount of funding from Norwest Equity Partners. According to Crunchbase, the company had raised at least $34 million previously, via a 2010 round from Riverside Partners.

Zentera Systems, a three-year-old, San Jose, Ca.-based cloud network company that connects enterprise applications and data from on-premise environments to private or public cloud data centers, has raised $4.9 million in Series A funding from CDIB Venture Capital, along with unnamed earlier investors.


New Funds

Paige Craig, a Marine-turned-entrepreneur-turned-angel investor who has made more than 100 investments, including in Lyft, Postmates, AngelList,Twitter, and Plated, has officially launched a seed fund called Arena Ventures that intends to lead up to 20 deals a year in San Francisco and L.A., where Craig is based. He’ll also be sharing his deal information and other insights via a weekly email that can sign up for here. (We met Craig late last year while moderating a panel about seed investors’ pro rata rights. If you’re interested in learning more, L.A. Business Journal has just published a nice profile of him.)

Kensington Capital Partners, a 19-year-old Toronto-based investment firm, has held a second closing of its newest fund of funds, which now has investor commitments of $193 million (or $154.6 million in U.S. dollars), up from $160 million when it held a first close last November. Among the fund’s newest LPs: Torstar Corporation. Among its biggest LPs: the Canadian governmentMore here.

Next Frontier Capital, a new, Bozeman, Mt.-based venture capital firm, has raised $11 million for a debut fund that it hopes will close with $20 million. Founder Will Price tells the Bozeman Daily Chronicle he plans to fund up to a dozen companies with the capital. Price was previously CEO of a San Francisco-based ad tech platform named Flite. He also spent several years as a principal, then managing director, at Hummer Winblad Venture Partners (now known as HWVP).

Valor Equity Partners, the 20-year-old, Chicago, Il.-based private equty firm, has closed its third fund with $490 million. The firm says it has made 66 investments in 34 platforms over the years and that as of March, roughly a third of its newest fund’s capital had been committed in companies, including Addepar, Fooda,, and Renovate America. ChicagoInno has much more here.



Cisco is acquiring Piston Cloud Computing, a four-year-old, San Francisco-based startup known for its own distribution of the OpenStack cloud software stack. Terms of the deal weren’t disclosed. Piston had raised at least $22.4 million from investors, shows Crunchbase. Its backers include Data CollectiveSwisscom VenturesTrue Ventures, and Cisco itself. eWeek has more here.

eVestment, a 15-year-old, Marietta, Ga.-based company that produces traditional and hedge fund data and analytics for the institutional investing community, has acquired TopQ, an Edinburgh, Scotland-based private equity analytics platform. The amount of the deal was not disclosed.  According to Crunchbase, eVestment has raised $19 million from Silicon Valley Bank.

IBM is buying Blue Box, a 12-year-old, Seattle-based private-cloud-as-a-service company that had raised at least $26.6 million from investors, including Founder Collective and Voyager Capital. Terms of the deal weren’t disclosed. Fortune has more here.



Jason Child, who has spent the last four years as the CFO of Groupon — and who helped take the company public in 2011 — is joining Jawbone at July’s end, becoming CFO of the consumer gadget maker. Before joining Groupon, Child had spent eight years at Amazon, serving as VP of finance among other roles.

OpenView Venture Partners has promoted four employees — Blake Bartlett, Mackey Craven, Devon McDonald and Ricky Pelletier — to partner. More here.

Mina Radhakrishnan, who was long Uber’s head of product, is becoming an entrepreneur-in-residence at Redpoint Ventures, reports Recode.

Early (and continuing) Twitter shareholder Chris Sacca finally publishes some of his highly anticipated advice for the company and where it can go from here.

Facebook COO Sheryl Sandberg, who abruptly lost her husband, Dave Goldberg, one month ago while their family was vacationing in Mexico, marked the end of sheloshim  — a 30-day period of mourning for close relatives– with a moving tribute on Facebook. “[I] am sharing what I have learned in the hope that it helps someone else. In the hope that there can be some meaning from this tragedy.”



According to new data out of the IVC Research Center, venture capital dollars shot up 300 percent in China between 2013 and 2014, and more Chinese investors are looking to plug capital Israeli high tech companies, too. IVC estimates that Chinese investors will invest at least half a billion dollars in Israel-based startups this year and that half of the funds that raise money by year end will have at least one Chinese investor. Globes has more here.


Essential Reads

Oh, it is on: According to Bloomberg, the fantasy sports company DraftKings just signed a multiyear marketing agreement with Madison Square Garden Co., displacing rival FanDuel in a contract that gives the No. 2 daily fantasy sports company its first sponsorship that includes multiple teams and a venue. More here.


My 977 days with Somali pirates.

Costco’s amazing pizza sauce machine.

Serious balloon art.


Retail Therapy

Now you can customize your air, too.

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